The Fuse
Stock futures are lower this morning following through on Tuesday’s weak session. Volatility did not rise as much as expected though buying interest in stocks was simply not there. With a skeptical eye, bulls are waiting for the next catalyst to help move the markets higher, but there is nothing clear about it.
Interest Rates are slightly higher this morning but bonds are playing a ‘safe’ role today. Yields falling very slightly but still well above 4% on the longer end of the term structure.
Cuts to oil production cast a pall over the markets Tuesday along with the hangover effect from the holiday shortened week. The dollar rose up as well, helping to push gold and silver downward. The message here is inflation is getting better and the economy is growing pretty hot.
Strong earnings and guidance last night from Zscaler and Gitlab along with HealthEquity. Later today we’ll hear from PLAY, XPRS, VRNT, GME and ChargePoint.
Apple will have an event next Tuesday and likely target the next iPhone release, while some big sector conferences start opening up around the world. These are important to follow as some ‘nuggets’ are often released at these meetings.
Back from the holiday the sellers were in a mood. Breadth was horrendous, thanks to the Russell 2K, which once again led the markets lower.
This big index has influence, and pushed breadth down nearly 4-1 negative. Yet, this indicator is still clinging to a buy signal for now.
Volume is starting to come back but we may not see it completely evolve until next week, which is a huge options expiration session on Sep 15th. For now, we continue to fight in a tight range and until we have breakout on higher volume, there is no reason to get excited and lay out a ton of risk.
A modest pullback should not be a surprise and even a move to the 20 day moving average at 4447 would be rather healthy. That would be a 1% move down, and allow dip buyers to step in. The only issues is the Russell 2K, which spilled today on heavier turnover. If that continues that will drag the other indices lower.
The Internals
What’s it mean?
Stock buyers were in no mood to take the markets up yesterday as the three day holiday hangover was evident. Bonds were down, gold was down and volatility was up – a tough brew for the bulls, at least temporarily. The VOLD spit the bit all day long, VIX picked up while ticks were extremely negative all session. Put/calls rose up as well, but they are not quite on buy signals as of yet. Let’s see how rates influence the stock market later in the week.
The Dynamite
Economic Data:
- Wednesday: Global PMI, ISM Non-manufacturing, Beige Book
- Thursday: Jobless Claims, Productivity & Unit Labor Costs, gas/crude inventories
- Friday: Consumer Credit
Earnings this week:
- Wednesday: GME, CHPT, AEO, VRNT, PLAY, SPWH
- Thursday: SAIC, DOCU, TORO, RH, ZUMZ
- Friday: KR
Fed Watch:
Several Fed speakers this week as fed funds futures dropped sharply last week after the jobs report hit. Perhaps the Fed is closer to done than many think.
Stocks to Watch
Interest Rates – We’ve seen a slippage in rates recently, we’ll see if overseas markets keep that trend going.
VIX – look for the volatility index to move back up following the long weekend.
Technology – These stocks have been hot the last few weeks, if they pull back we’ll be looking for some good entry points.
